Directors of ARCO have approved a $9.2 billion capital spending plan for 1994-98.
The 5 year upstream spending plan will focus on international oil and gas operations and ARCO's Vastar Resources Inc. subsidiary.
Capital spending on oil and gas operations is expected to reach $5.6 billion, with 48%, $2.7 billion, going to international and $1.7 billion, or 31%, to Vastar.
"We believe this level of spending should allow the international company and Vastar to more than replace their production through reserve additions during the plan period," said Mike R. Bowlin, ARCO president and chief executive officer.
ARCO's U.S. operations are slated to spend $41.2 billion, or about 21% of the total.
Exploration will account for $1.5 billion, or 27%, of upstream outlays. About $740 million will go to non-U.S. operations and $600 million to Vastar. Alaska will account for the rest of the exploration capital, or about $200 million.
ARCO's downstream operations--refining and marketing, ARCO Chemical Co., coal, and transportation--will continue a strategy aimed at boosting profits and returns from existing assets while pursuing "selective growth opportunities."
Downstream units are expected to spend $3.5 billion, with $1.2 billion going to refining/marketing. About 30% of this is to be spent on clean fuels projects during the first 2 years of the plan.
ARCO Chemical will spend about $1.7 billion, nearly 40% of which will be allocated for opportunity or growth projects related to polyols, propylene glycol, and propylene glycol ether.
The remaining $600 million in downstream capital will be split evenly between coal and transportation.
Of the overall budget, Bowlin said, "This streamlined capital spending program, combined with the recent note offering related to Lyondell Petrochemical Co. and a $400 million/year cost savings program, puts ARCO in an excellent operating and financial position.
"At these spending levels, production will remain strong during the period, growing by 5% to 934,000 b/d of oil equivalent in 1994 from 1993 levels. Growth is expected to continue to 963,000 b/d by 1966."
The production outlook does not include a possible redevelopment program in Algeria's Rhourde El Baguel oil field.
ARCO's plans for its base case capital program are tied to a "conservative"--but undisclosed--crude oil price forecast.
ARCO previously disclosed plans to restructure U.S. Lower 48 oil and gas operations and a company-wide reduction in personnel that is expected to eliminate 3,300 jobs. These and other operating cost efficiencies will result in after tax savings of about $400 million/year, compared with 1993 levels. The savings should be fully realized by 1996, Bowlin said.
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